The two major legal systems in Europe are the common law and code or civil law Common law is the British legal system, and is now used in former British colonies, including the U.S. It is sometimes referred to a"judge-made law" since the law itself is not written down anywhere, but is the product of judicial decisions, and in particular the decision of appellate courts in resolving actual disputes between individuals, or between individuals and the state. Scully (1992)identifies 54 countries as using common law. In contrast, legal codes are passed by legislatures and interpreted by judges. Thus, in code countries judges are said to interpret the law, but not make it. In practice, this distinction between the roles of judges is not the major difference between code and common law systems. Rather, as discussed below, the major difference is in the amount of deference given to the state. Scully (1992)identifies 94 countries in his sample as following code law. (The term"civil law refers to code countries but also to the non-criminal part of the common law and sometimes to non-ecclesiastical law To avoid confusion I refer throughout to"code "law.) If property rights cannot be effectively protected, then there are several detrimental effects on income and wealth. First, people will invest less in creating wealth because returns are uncertain. Second, some people will spend their time in the fundamentally unproductive activity of trying to predate against others as, for example, by becoming thieves, or by becoming corrupt bureaucrats. The potential productivity of these people in producing goods and services is lost to the economy. Third, productive people will spend part of their time and effort in protecting themselves from predators, as by guarding resources from thieves or hiding resources from corrupt tax collectors. TheThe two major legal systems in Europe are the common law and code or civil law. Common law is the British legal system, and is now used in former British colonies, including the U.S. It is sometimes referred to a “judge-made law” since the law itself is not written down anywhere, but is the product of judicial decisions, and in particular the decision of appellate courts in resolving actual disputes between individuals, or between individuals and the state. Scully (1992) identifies 54 countries as using common law. In contrast, legal codes are passed by legislatures and interpreted by judges. Thus, in code countries judges are said to interpret the law, but not make it. In practice, this distinction between the roles of judges is not the major difference between code and common law systems. Rather, as discussed below, the major difference is in the amount of deference given to the state. Scully (1992) identifies 94 countries in his sample as following code law. (The term “civil law” refers to code countries, but also to the non-criminal part of the common law and sometimes to non-ecclesiastical law. To avoid confusion, I refer throughout to “code” law.) If property rights cannot be effectively protected, then there are several detrimental effects on income and wealth. First, people will invest less in creating wealth because returns are uncertain. Second, some people will spend their time in the fundamentally unproductive activity of trying to predate against others as, for example, by becoming thieves, or by becoming corrupt bureaucrats. The potential productivity of these people in producing goods and services is lost to the economy. Third, productive people will spend part of their time and effort in protecting themselves from predators, as by guarding resources from thieves or hiding resources from corrupt tax collectors. The 10